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Contract Talks Between Actors, Advertisers at a Standstill

Two Sides Wrestle Over Compensation for TV, Online Commercial Work

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LOS ANGELES (AdAge.com) -- With just 20 days remaining on Hollywood actors' $700 million TV-commercials contract, both sides look increasingly intractable and disagreeable.

Despite a media blackout, insiders tell Advertising Age that the first week of negotiations was spent unprofitably: During the week of Feb. 2, both sides exchanged accusations over who leaked portions of the pattern of demands to the press and no substantive progress was made on issues.

At stake
Actors are fighting to preserve the current compensation system, which pays them every time their commercial airs, and they are seeking to finally gain jurisdiction over spots that air online. Across the table, the Association of National Advertisers and the American Association of Advertising Agencies are instead focused on TV, seeking to end the practice of paying actors every time a commercial airs and instead switch to a "gross ratings points" model.

Such a model, advertisers say, would keep current compensation levels the same in aggregate, but would pay actors less for broadcast TV spots and more for cable ads. Missing from ad groups' model is standardized payment for web advertising, for which advertisers generally cut their own (generally highly favorable) deals directly with actors.

"I find that ludicrous," said Mark Measures, director of on-camera and voice-over commercials at Abrams Artists Agency in Hollywood, "since they can't seem to keep track of the commercials they have on the air currently." Mr. Measures points out that TNS ad-spending data and Nielsen ratings are often at odds with each other, a disparity that has eroded many actors' and agents' trust in advertisers' ability to accurately account for the whereabouts of the TV spots they book.

While officials from the Screen Actors Guild and American Federation of Television & Radio Artists declined to comment, a joint policy committee document obtained by Ad Age shows that actors are seeking a 6% cost-of-living increase over the life of the next three-year commercials contract.

The negotiations grind on as Interpublic Group of Cos.' Mediabrands division this week predicts a 20% plunge in advertising in the U.S. and 10% to 15% tumble around the world.

Consumer media consumption
Ironically, the research may serve as the very reason not to standardize internet payments and adopt a cable TV plan, at least in part on how consumers are consuming their media. Joseph Benarroch, a spokesman for Mediabrands, which includes Universal McCann, Initiative, Magna and J3, said permanent behavioral changes have occurred among consumers in the U.S., China and Australia. Among its findings: Cable TV is now said to be seen as an "expendable" non-essential item, which can be replaced by online video, and internet and mobile are now seen as a critical part of everyday life, as essential "as oxygen."

As such, advertisers are expected to continue to shift their spending toward online and away from traditional TV ad buys. Insiders expect internet jurisdiction to be a sore point when talks resume next week, because even highly sought-after TV commercial actors are already feeling the effects.

For example, consider the plight of Camden Singer, 35, who has earned her living for the last seven years solely by starring in TV commercials in Los Angeles: She booked 15 commercials last year, 12 of them national broadcast spots. This year, however, she said things are "slowing down, becoming more sporadic."

Even more worrisome than the difference in the amount of work, Ms. Singer noted, is the type: Far less well-paying internet gigs can be found, even among advertisers who also shoot national broadcast TV spots. Ms. Singer recently booked two commercials for Walmart: One was for use solely online, the other for national broadcast.

For her internet-only Walmart spot, Ms. Singer was paid a flat fee of $1,500 and held under contract for a year, meaning that she was not permitted to do any work for a competitor such as Target.

But she also filmed a TV commercial in early December that Walmart broadcast nationally, and the difference in pay is astonishing: While Ms. Singer won't be allowed to shoot a TV commercial for a rival for 19 months, she has made $10,000 starring in a TV spot that has only been running nationally since February. She says it will likely earn her some $20,000 by the end of this year.

And even after she's booked a national TV commercial, Ms. Singer said she lacks confidence in the accounting of their airings. "You never know if it's going run, when and where it's going to run, and if you'll be paid correctly," she said.

Actors' lack of trust
The vast disparity in pay between online and TV, and the difficulty in exacting the proper amount, is why labor attorney Ira Shephard predicted that the current SAG/AFTRA contract negotiation will be "exceptionally nerve-wracking" for the advertisers' current chief negotiator, Doug Wood. Actors "don't trust the industry, and you have to bend over backwards to get them to do so," said Mr. Shephard.

He should know: Mr. Shephard served as the advertisers' chief negotiator during the 2000 SAG commercials strike and 2003 commercials contract negotiations. Now a partner in the Washington office of Saul Ewing, he advises both advertisers and agencies.

"The current contract's basis is in the 1950s, and if you try to change a contract that hasn't been changed in many, many years, it's going to be a very tough negotiation," says Mr. Shephard. "And now it appears that there's going to be an attempt to make a dramatic change in the existing contract, a change that's probably even more difficult now because SAG has so many distractions."

SAG's theatrical and TV contract expired on June 30, 2008, and rancorous internal politics have kept it from sending out Hollywood producers' "last best and final" offer to membership for a vote.

Simply extending the commercials contract is not a likely option, Mr. Shephard said. The soon-to-expire commercials contract has already been extended twice in an effort to avoid the sort of bruising work stoppage that occurred in 2000, when SAG went on the longest strike in its history. That six-month commercials strike caused $228 million in damage to the Los Angeles economy, according to the Los Angles Economic Development Corp.